• Archive for the ‘Audit Quality’ Category

    The Problem Of An Audit Firm Market Exit: New Research From University of Chicago Booth School of Business

    By • Jul 29th, 2013

    A post at University of Chicago Booth School of Business Capital Ideas blog discusses new research from Joseph Gerakos and Chad Syversen on the dangers of industry concentration in the event of a market exit by one of the large audit firms. For example, what if PwC, which audits five of the top ten global pharma companies ran into trouble amid the ongoing investigations of bribery of Chinese officials, in particular by PwC audit client GlaxoSmithKline and a few of its other audit clients?



    Scott London Subverted Sarbanes-Oxley: Big Four Mock Audit Partner Rotation

    By • Apr 22nd, 2013

    I noticed a small little thing in one of the first stories about Scott London. As I tried to research and write about it, I waited for someone else to pick up on it. (No one else did.) Scott London seems to have subverted the intent of Sarbanes-Oxley Section 203 that requires lead engagement partner rotation off engagements to promote objectivity, independence and professional skepticism.



    HP and Autonomy: Material Writedown With A Side Of Serious Fraud

    By • Nov 20th, 2012

    HP announced today it is writing down more than $5 billion, or almost half of the Autonomy acquisition price, because of “serious accounting improprieties, misrepresentation and disclosure failures” by Autonomy former executives. Deloitte was the auditor of Autonomy, a UK software firm acquired by HP in 2011 for $11.1 billion.



    Four Years After Madoff, Audits and Auditors of Broker-Dealers Still Lousy

    By • Aug 30th, 2012

    How much lower does investor confidence have to go? How many more billions do customers have to lose before someone steps up?



    Big Four Auditors and Jury Trials: Not In The U.S.

    By • Jun 19th, 2012

    You have to go outside of the US to see a trial of a Big Four audit firm to know what I’m talking about. Australia’s Centro case against PwC or Canada’s Nortel case where Deloitte partners testified recently tell you everything you need to know about why the Big Four will settle every time. Rather than have a jury and the public hear and see the pathetic state of the audit profession, its inability to stop executives who want to cheat, and its unwillingness to acknowledge liability as a firm when it screws up, the firms will reach into their seemingly bottomless pockets and pay up.



    Why Is The SEC Pursuing Deloitte Shanghai? Looks Like It’s Personal

    By • May 10th, 2012

    The Securities and Exchange Commission is rattling a dull sabre again towards Shanghai-based Deloitte Touche Tohmatsu CPA Ltd. for its refusal to provide the agency with audit work papers related to another China-based company under investigation for potential accounting fraud against U.S. investors. It looks to me like it’s personal rather than productive.



    Groupon: You Must Have Fallen From The Sky

    By • Apr 7th, 2012

    I expect the auditors to earn their fees by looking out for investors. But maybe that’s just pie in the sky.



    McKenna Now Writing At American Banker

    By • Sep 16th, 2011

    I’m writing now for American Banker. My first column covers a new appointment at Deloitte and how this might affect the firm’s clients in the mutual funds industry.



    New @Forbes: Bank of America Plays Hide And Seek Using Fannie Mae

    By • Aug 11th, 2011

    Making the non-obvious connections between the audit firms and their clients, between the clients and each other, and between the firms and each other is getting to be like shooting fish in a barrel.



    New at Forbes: My Comments On The Latest Sanctions Against Ernst & Young

    By • Aug 3rd, 2011

    As if Ernst & Young didn’t have enough to worry about now they’ve got a public airing of some dirty laundry by the PCAOB.